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Reliance Securities
ABB India (Buy)
Target: ₹1,607
CMP: ₹1,354.60
Led by better operating margins, ABB India’s has reported a strong performance with PAT grew by 18.2 per cent YoY to ₹83 crore in the third quarter of CY17. However, its top-line declined by 13.1 per cent YoY to ₹1,880 crore, as all its businesses reported lower revenues following GST roll-out.
Looking ahead, the Management expects revenue to come back to normal level as GST clarity issue among the suppliers and vendors is over.
ABB India was among the earliest players to tap solar opportunity in India via range of solar inverters (50 per cent market share) and power evacuation solutions.
In T&D space, high technology products i.e. HVDC, Static Compensators, FACTS & GIS are its key focus areas.
On the Rail side, it supplies Traction Transformers & Converters, which constitute 4-5 per cent of annual orders.
Valuing at 50x CY18E (15 per cent discount to its mean multiple of 60x (2005-15) earnings of ₹32.1/share, we have BUY recommendation with a target price of ₹1,607.
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